The Matthew Effect and Modern Finance: On the Nexus between Wealth Inequality, Financial Development and Financial Technology

The Matthew Effect and Modern Finance: On the Nexus between Wealth Inequality, Financial Development and Financial Technology

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The Matthew Effect and Modern Finance: On the Nexus between Wealth Inequality, Financial Development and Financial Technology

This paper analyses the role of financial development and financial technology in driving inequality in (returns to) wealth. Using micro data from the Survey on Household Income and Wealth (SHIW) conducted by the Bank of Italy for the period 1991-2016, we find evidence of the "Matthew effect" - a capacity of wealthy households to achieve higher returns than other households.

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